Conference 2000

Regardless of the increasing attention for the issues related to managing a corporation's real estate portfolio, little is known about the organisational and financial impact of CREM on the corporation and vice versa. This paper aims to highlight the value of managing corporate real estate and its contribution to the performance of a corporation both in a financial and no-financial manner. Based on the results of case studies a number of examples of added value are identified and an overview is presented of the impact of the elements on the financial performance of the corporation.

&quot;An important objective in the construction of real estate price indices is the creation of subindices by region or by neighbourhood. Environmental changes such as the improvement in the accessibility of a neighbourhood will result in different price changes across neighbourhoods. It is important that an appropriate method be selected for constructing such indices. One such method is the repeat sales method which has the advantage that it does not require the attributes of properties. In this paper, we construct an index of a particular house type in Bordeaux (the &quot;&quot;&quot;&quot;Èchoppes&quot;&quot;&quot;&quot;) for the period 1985-1997. This index shows steady price increases even during the bearish real estate markets of the early 1990s. When the city is divided into two regions, differences in price changes are observed.&quot;

&quot;This paper develops a behavioral model of the decision-choice of an elderly homeowner who owns her home free and clear in the starting period. The homeowner is faced with a choice among four scenarios: To maintain status quo by aging in place in a home that is owned free and clear, to sell the home, to obtain a reverse mortgage as a tenure plan, and to obtain a reverse mortgage as a line of credit. The homeowner hypothetically maximizes her utility in each of the scenarios, subject to the relevant budget constraint, and then chooses the scenario that yields the highest utility among the four maxima. The model is also represented graphically using the tools of budget sets and indifference &quot;&quot;&quot;&quot;curves.&quot;&quot;&quot;&quot; This is the first formal analysis of the role of preference structures (over flexible assets, aging in place, bequest, free and clear ownership, and other goods) in determining the demand for reverse mortgages. The model yields useful insights into understanding the reasons why maintaining status quo is the most popular option among the elderly, followed by the selling option, under current preference structures and market conditions. The model provides demand-side explanations for the largely untapped potential market for reverse mortgages.&quot;

The study examines four alternative rental forecasting models in the context of the London office market. We compare and contrast the forecasting ability of an ARIMA model, a Bayesian Vector Autoregression approach, a Structural model and a simultaneous equation model, in addition to some preliminary evidence with regard to combination models. The models are estimated using the CB Hillier Parker London Office index over the period 1977 to 1996, with out-of-sample testing undertaken on the following three years of data. Diagnostic testing is also conducted on the alternative models. The findings reveal that the Bayesian VAR model produces the best forecasts, while the ARIMA model fails to pick up on the large uptake in rental values during the testing period.

A number of different approaches have been used in developing models for construction cycles and models for CBD office construction cycles in particular. The best known of these are the models developed by Wheaton (1987) and Pollakowski et al. (1992) which are somewhat different in format to models developed by Barras (1983, 1994), Henderschott (1996) and MacFarlane (1998). A recent edition of the Journal of Real Estate Research devoted solely to property cycles, has further extended this work with models put forward by Tsolacos (1999) and Kummerow (1999). These models vary substantially in form and have quite different data requirements. This paper will consider the differences in approach represented by these models and some of the implications in their use which arise from them. The models are applied to data from Australian office markets.

This paper explores the merits of using an alternative approach to modelling commercial real estate prices over time. A real estate asset can effectively be modelled as a hybrid instrument combining a bond and options. Preliminary results of tests for two different option pricing models are presented (Central Paris and Central London office markets).

We describe an ALM model for housing associations. This model uses simulation to assess the associationsí risk and return profile. We show the pitfalls of just using a few scenarios. Finally, we show how this model can be used to obtain insight into the influence and effectiveness of specific policy instruments.

Over the last decade financial innovation has brought about an explosion in financial contracts that allow market participants to tailor their financing needs to match almost any cash flow or risk profile. It is now possible to shift virtually any type of financial price risk or alter a cash flow stream by entering into one, or a combination of, the many types of exotic financial derivatives that are readily available in the financial markets. Though estimates differ, the underlying notional principal of financial derivatives worldwide is now almost certainly in excess of $60 - $70 trillion and could be significantly greater if an accurate accounting were possible. Many market specialists think that we are just beginning to see the myriad of applications of financial innovation, or financial engineering, and the theoretically unlimited types of derivative contracts that make this innovation possible. The use of derivative contracts is not yet wide spread in the management of investment real estate, however, it is almost surely just a matter of time before the marketplace will bring forth derivative contracts designed to meet the risk management and financing need of not only real estate investors, but the needs of all parties involved in a real estate transaction. While the securitization and derivatization that has become so widespread in the general business and securities investment sectors may not seem applicable to real estate transactions, which is not the case. The marketplace, through innovative intermediaries such as Bankers Trust, Solomon Brothers and others, has demonstrated the ability and desire to supply derivative products for almost any perceived need. It only remains for real estate market participants to begin to think about what type of financial structures and risk management issues can be addressed in the market place of financial innovation. A primary issue in the development of real estate derivatives is the performance measurement used for the underlying asset. For other asset class derivatives, such as interest rate and common stock derivatives, this is not much of an issue since the underlying trades frequently in an organized market with instantaneous reporting. Unfortunately, for real estate this type of price information is only available for REIT stock, which arguably does not appropriately reflect the performance of the underlying real estate. This paper is an exploration of the potential for, and feasibility of, innovative financial instruments written on a broad array of real estate. Section one of the paper looks at potential users of real estate derivatives and the applications derivatives might find. In section two, a number of potential derivative contracts are identified which could meet the needs of the potential users. The third section deals with the pricing issue and examines various measures of real estate price and rent performance, which could be used to model derivative prices. The fourth section evaluates the behavior of the properties of options written on a specific index by testing the theoretical conformity of the optionís ìGreeksî. Finally, the conclusion of the paper addresses avenues of exploration, which should be fruitful in aiding the process of financial innovation in real estate.

New business opportunities and challenges are changing the structure of organisations and altering the pattern and demand for space. These agents of change on organisations decision for new space formed the basis for a questionnaire survey of 167 new space occupiers. A degree of importance index constructed from the results can provide a new platform for corporate real estate planning and a strategic approach to commercial property market decisions.

The longevity of the income stream of a property will have impact upon the value of that investment. The UK market is dominated by the upward only lease review, as a result the underlying income stream from property investments has similar characteristics to that of a income strip of a corporate bond. However, the majority of the value of a property investment often resides in its income stream and the anticipated growth of that income. At the end of the lease the tenant of the property has the right to renew the lease on similar terms as before, or can choose to relinquish their rights of occupation, at which time the investor must either re-let or redevelop the property. As a result of this the end of a lease term can represent a significant risk to the investor in terms of both loss of income and value on the asset. This risk should be reflected in the pricing of property so that properties with shorter terms to lease expiry should be less valuable than those with longer terms to expiry. Using cross-sectional IPD annual data for 1999 this paper tests the hypothesis that there is a functional relationship between equivalents yields and the length of term to expiry of a lease for an homogeneous group of prime standard shop properties. Whilst the initial analysis also attempted to incorporate the term structure of money market interest rates, all the analyses conducted found that this factor was not a statistically significant factor in determining equivalent yields.

In this paper, the Finnish real estate service sector is analysed in order to evaluate itís competitiveness in the globalising business environment. Real estate services (RES) are typically location-bound or ìsoftî services, and a common pattern of internationalisation for RES companies is to develop stand-alone business system in each target country. An interesting question in the case of the Finnish service sector is the competitive advantages of small domestic RES companies compared to large multinational companies possibly entering the market. What kind of strategic decisions are required of the small, home-market oriented RES sector? What are the potential competitive advantages of these companies compared to large multinational RES companies? The focus of this paper is on the analysis of the supply of services in the Finnish property market. In this paper the competitive advantages of the Finnish real estate service sector are assessed from the point of view of the Finnish real estate service firms. The competitive strategies of Finnish RES companies are assessed from the point of view of both increasing international competition and demand. The research is based on literature study on the subject. 17 theme interviews of leading Finnish RES companies were conducted in order to deepen the understanding of the subject. The three dimensions of competitive advantages of service firms by Dunning are: - ownership advantages - locational advantages - internationalisation advantages The significance of these dimensions for the Finnish RES sector is analysed based on the theme interviews. A typical Finnish RES company is small and home-market oriented. Most of the companies, however, expect international RES companies to enter the Finnish market in the near future. This development will increase both competition in the RES sector and demand of professional services. As a result, Finnish companies are forced to adopt international practises and standards. Internationalisation is rather a challenge than a threat for Finnish companies. However, very few actions have been taken so far in order to be prepared for the international competition.

&quot;We assess nonparametric kernel density regression as a technique for estimating mortgage loan prepayments - one of the key components in pricing highly volatile mortgage-backed securities and their derivatives. The highly non-linear and so-called &quot;&quot;&quot;&quot;irr ational&quot;&quot;&quot;&quot; behavior of the prepayment function lends itself well to an estimator that is free of both functional and distributional assumptions. The technique is shown to exhibit superior out-of-sample predictive ability compared to both proportional hazards and proprietary practitioner models. Moreover, the best kernel model provides this improved predictive power utilizing a more parsimonious specification in terms of both data and covariates. We conclude that the technique may prove useful in other financial modeling applications, such as default modeling, and other derivative pricing problems where highly non-linear relationships and optionality exist.&quot;

This paper presents initial findings from an investigation by questionnaire survey into moves towards convergence in European practice relating to valuations prepared for accounting purposes. It debates and questions the reasons why convergence is the ambition and tracks the progress ñ or lack of progress ñ revealed to date before suggesting an agenda for further discussion and research.

The paper endeavours to clarify the role of property as a financial asset in the evolving investment strategies of European banks. After a brief exposition of the theory of transaction cost economics the paper discusses the recent changes in the structure of European banking organisations and the involvement of the various groups of banks in property. This is followed by a transaction cost analysis of property as a financial asset. It is shown that transaction costs are largely accounted for by the costs of obtaining and processing information. Using asset specificity as the main criterion, two types of property are distinguished: Category 1 properties (low specificity) prompt the separation of the physical asset from the investor by the insertion of specific governance structures (referred to as ëfiltersí) which offer the investor liquidity and flexibility. Category 2 properties (high specificity) prompt long-term ownership thus attracting ëdirect investorsí. The paper then argues that filtered transactions (e.g. via securitisation) will increasingly become the domain of investment banks who are able to abstract from the full specificity of property, whilst those firms dealing in lending, property advice and, of course, direct investment will have to face up to property in its full specificity. However, in order to reduce the associated transaction costs, many organisations, with the exception of those firms specialised in property (e.g. mortgage banks), property analysis is likely to be contracted out to specialising property teams, companies, and consultants. The conclusion addresses the implications of these findings on the institutional environment and highlights avenues of further study before commenting on the limitations of transaction cost economics.

This paper examines the rejuvenation according to identified benchmark standards of a town which had deteriorated from a dormitory town established for industrial workers into a dysfunctional suburb with one of the highest crime rates in the country, high unemployment and a high proportion of the population receiving welfare support.

Electronics and information technology sectors have faced extremely fast growth in Finland during recent years. Unfortunately, the real estate sector as well as most other traditional technical sectors have not been able to follow this development, but have actually lost relative attractiveness among students. In this paper, guidelines for real estate education are searched in order to increase the attractiveness of the sector among students and workforce. Current education supply is analysed in order to find possible supply gaps. Suggestions are made to improve the attractiveness of the sector. In Finland the real estate education traditionally follows the continental (German) engineering tradition with focus on the construction of property. The pan-European change of the property sector has, however, changed the industrial structure of the real estate sector towards greater business-orientation. This development has major implications on the real estate education in Finland. These structural changes are similar in most other European countries. In Finland, traditional real estate education is largely based on the study of construction technology, house-building and surveying. Education is technology-oriented, and economic and financial aspects have received minor attention. This is the case in vocational education and training as well as in universities and polytechnics. The data concerning real estate education is based on a research project made for Tekes, the National Technology Agency. The aim of the project was to collect information concerning real estate education in Finland in order to find out the current state of the Finnish real estate education. Real estate education is classified by subject of education as well as by geographical location of the educational institute in question. In the future, business related and service related aspects should get greater emphasis in real estate education. The emphasis should be more and more on e.g., team work, quality issues, project management and project work, customer orientation, international standards and criteria etc. Increasing the business and service orientation of real estate studies could also increase the attractiveness of real estate studies, which have traditionally been very Technology-oriented.

Two major government reports in the Republic of Ireland and Northern Ireland have heralded the changes likely to take place in the business environment in Ireland over the next ten years. The reports, Technology Foresight Ireland (Republic of Ireland) and Strategy 2010 (Northern Ireland), predict a business culture dominated by information technology where electronic commerce plays a major role in the economy. In analysing the forces for change over the next decade the concept of a knowledge-based society is presented in order that the population can be equipped with the skills to meet the challenges of the information revolution. The purpose of this paper is to assess the impact of a knowledge-based economy in terms of changes in the property market and more importantly what changes in the real estate curriculum need to be effected so that real estate professionals are fully equipped to meet the evolving needs of clients.

Large occupiers in Finland have traditionally owned significant part of their premises. This has been caused by corporate taxation benefits or pure tradition to own rather than a conscious strategic choice. It was not until the 1990s that Corporate Real Estate (CRE) has gradually become recognised function in some more advanced companies. The aim of this paper is to analyse and evaluate the current level of CRE strategies in 15 major Finnish companies representing different industries: retail, high-tech, basic industries, public sector. The main topics reviewed in this paper are: 1) The role of real estate resources, 2) The key features of CRE-activities 3) Evaluation of CRE-management by two critical factors: communicational and organisational issues. The data for the research was gathered in in-depth interviews with managers responsible for CRE functions in these companies. The interviews were conducted in two phases: in phase one the basic facts of corporate real estate management were collected; in phase two these facts were evaluated and discussed further. Nine critical factors affecting the performance of CRE ñ management were identified based on these interviews. Preliminary results show that corporate real estate management has become more sophisticated in recent years. However, remarkable differences remain between different companies. The communication between CRE-management and top management and business units seems to be one of the most significant problems in enhancing the role of corporate real estate management.

&quot;The last twenty years of the 20th century have shown some significant changes in the performance measurement of real estate. Under pressure of the major asset classes stocks and bonds in which case advanced performance measurement systems are common as a tool for investment decisions in these asset classes, the asset class real estate was forced to take action in this field. The anglo saxon countries UK, USA and Canada and Australia had already developed performance measurement systems of some sort. The Frank Russel index started already in 1975 followed by the Investment Property Databank (IPD) in 1985 and the Australian Index was established soon there after. At the beginning of the nineties initiatives for a real estate index were developed in France, Ireland and the Netherlands, mainly in cooperation with IPD More recently Sweden, Germany, South Africa developed indices and feasibility studies are currently underway in Belgium, Denmark and Portugal. In the Netherlands the initiative was taken by the Real Estate Council of the Netherlands (ROZ), which is an umbrella organisation for property owners' interests. It lasted until 1996 before the ROZ/IPD real estate index in the Netherlands was published for the first time. The major difference in the publication at that moment was that Ireland was able to include historical time series in their presentation and the Netherlands not. Attempts had been made by using brokerage data from the past but they failed. The reasons why will be discussed later in detail but one obvious one was the fact that unlike the Anglo-Saxon countries where regular yearly valuations of real estate are a must, in the Netherlands and in general in continental European valuations are not embedded in a regular yearly process. In this article attempts are made and described to find solutions for the lack of valuation data in different ways. The ultimate goal is to come to a common approach which will be applicable in each country without sufficient valuation information so that reasonable simulations will create a &quot;&quot;&quot;&quot;reliable&quot;&quot;&quot;&quot; picture of the past.&quot;

Zipf Law (Zipf, 1949) is an empirical evidence which shows a relationship between rank and size of cities. The largest city should be n-times as larger as the nth largest city: the size of each city is measured by its population and the city with largest population has rank 1, and the second rank 2, and so on. This Law has performed surprisingly well for the size distribution of cities in most industrialised countries, although a convincing theoretical framework for its existence is still lacking. Many different analysis has been done in the literature for explaining such an evidence. Generalisations of Krugman (1991 a-b) models -with human capital and congestion- where their outcome are rank-size distributions (as contrary to the original: spreading of identical size cities). This paper focus in the analysis of the rank-size distribution for the Spanish regions since 1960 thru 1998, trying to study the distribution and type of urban agglomeration by regions. Also, the evolution of these agglomerations is contrasted. The paper concludes remarking important differences between the regions and analysing the different patterns of agglomeration of Spanish regions, where Zipf Law is not fulfilled.

The author presents the recent problems in the constitution and the development of real estate market and related to it construction market in Slovakia. He characterize the political and economical problems and their influence on these markets. In his paper he tries to define the degree of the maturity of the real-estate market in Bratislava.

Pooling the forecast outcomes from different models has been shown by Makridakis (1989), Clement (1989) and others to improve out-of-sample forecast test statistics beyond any of the individual component techniques. As well as conventional combining, a different approach to forecast combination is also followed in this paper viz. we use a method suggested more recently by Ridley (1997, 1999) in which negatively correlated forecasts are combined to see if this offers improved out-of-sample forecasting performance in property markets.

Real Estate valuation in France has known dramatic improvements since sophisticated Anglo-Saxon investors came to buy large portfolios of assets using the discounted cash-flow technique. We argue that the DCF approach is probably a first step into the financial revolution of Real Estate, and should be developed through the real options approach.

This paper presents rent models for retail, office and industrial property in the U.K. Panel data are used covering 11 regions for 29 years, enabling us to overcome the limitations of a relatively short time series. We use an Error Correction Model (ECM) framework to estimate long run equilibrium relationships and short term dynamic corrections. The combination of panel data and an ECM is an innovative approach that is still being developed in econometrics. We construct new supply series that combine infrequent stock data with more frequent construction data. For each property type, separate regional models are estimated. The regions are then combined into a number of panels on the basis of the income and price elasticities in the long run and short run models. Unlike previous studies, we find no evidence of a broad north-south divide between low growth and high growth regions. Like these studies we do find a London effect: demand elasticities in London with respect to both price and supply are much lower in magnitude. We conclude that, while the economic drivers may vary, there is no evidence of differences in the operation of the regional property markets outside London. Our final models are parsimonious with single measures of economic activity and of supply and always support the use of an ECM.

There is rising concern with the manifestations of growth that are radically altering the images of cities and towns and the surrounding rural landscape. The past hundred years have been an age of unprecedented urban growth throughout North America, growth that has been matched by the shift from a rural to an urban society. The majority of Canadians, and their American counterparts, now lives in large cities; over 75% of Canadians will name a city or town when asked where they live. Yet many residents still cling to images of a life past that is more akin to small towns that embody close proximity to all the conveniences of daily living. This ìidealî does not coincide with the immense carpet of houses, shopping centres, warehouses, low office blocks, and manufacturing and distribution plants, crossed by highways, that is unrolling across the landscape as far as the eye can see.

The work is focused on the use of fuzzy numbers in the reconciliation phase of real estate appraisal. In this particular phase, could happen to observe several different values coming from cost, market and income approaches. The main issue of this work is trying to weight them through fuzzy numbers instead of normal numbers It will be shown the difference between a normal interval of value and a fuzzy triangle based on the possibility theory. It will be shown, through an application that fuzzy numbers allow us to show the complexity of real estate market in an appraisal report. After a brief introduction, the second paragraph will analyze the concept of reconciliation in real estate literature and will be offered a brief definition of possibility theory and fuzzy numbers. In the third paragraph will be shown an application. The fourth paragraph will offer some possible conclusions.

This paper examines the evolution of real estate markets in Hungary, the Czech Republic and Poland. The research reports the findings of an international survey of investors and property companies. Results show a perception of high risk for medium levels of return. Behavioural differences between UK and European compahnies are identified.

At present the housing market by its scale as well as by the number of operations is the most active real estate market segment both in Russia at large and in the Udmurt Republic, which I am a representative of, in particular. The overwhelming part of real estate and appraisal companies are grouped on it. Reasoning from in-built preconditions and tendencies we may postulate that the housing market is expected to be in further progress.

Property advice to business occupiers needs to be linked to the core functions of the business and valuers need to appreciate the implications that property has for business processes. This paper publishes some of the findings of a research project that examined whether valuers and valuations have a role in the provision of more strategic property advice to business occupiers.

This paper seeks to establish how access to home ownership has been or is being affected by recent changes in the Australian labour market. This is an important research question given the evidence suggesting that the traditionally high proportion of homebuyers in Australia ñ as distinct from outright owners within the population has fallen by about ten percent over the last decade (Yates 1997, 1999). The research is based on a national survey of first time homebuyers in South Australia, New South Wales and Western Australia and this paper reports on the preliminary findings.

Real estate is an important asset, but as a direct investment subject to several difficulties. Shares of public open end funds or of real estate stock corporations represent a possible way for an investor to avoid these problems. The focus of this paper is the analysis of inflation risk of European real estate securities. An overview of the institutional frameworks regarding these companies is given. The returns of real estate securities in France, Germany, Switzerland and the United Kingdom are examined for the period 1980:1- 1998:12. Besides the classical Fama/Schwert-approach, shortfall risk measurements have been used. In this context, transaction costs in particular have been taken into account.

This paper analyses developments in the growth and configuration of the institutional savings markets within the European Union. The paper discusses the changing socio-economic context in which investment services within the EU are being delivered. The is followed by an examination of drivers of market integration such as the growth and consolidation of the fund management industry, the demographic and fiscal pressures for reform of pensions markets and the process and effects of the deregulation of investment services markets. There is a review of outstanding sources of market segmentation. The projections for future growth in pensions are outlined and implications for real estate investment assessed. It is concluded that, although numerous imponderables render reliable quantitative projections problematic, growth and restructuring of the institutional savings market is likely to increase cross-border capital flows to real estate markets.

This paper aims to take the principles of benchmarking, and internal benchmarking in particular, and to demonstrate how we in real estate practice and education can learn from industry while moving forward in our own spheres. The competitive pressure to improve the quality of products, services, and management effectiveness is a major factor in causing organisations to become interested in benchmarking. Leading companies from most industries are now benchmarking and its use is not limited to any one type of industry (Bendell et al, 1998). Benchmarking has transformed the performance of many companies in the past 25 years and in particular in the 1990ís. Could it now be the tool for the transformation of the real estate sector too? Can we afford not to benchmark?

The possibility of gaining profits from international investments is a commonly known source, and there exist plenty of practical proofs for this fact. However, most overseas institutions-investors still stick to the opinion that it is far more safe to concentrate their investment resources within the internal local markets. Thus, there arises a question: Why does this happen? One of the probable reasons (in our opinion) is the lack of information about the structure and features of the markets of different countries. The present article represents a short survey of the industrial real estate market in Belarus, and the ways for acquisition of real estate by foreigners and overseas businesses, advantages of investments in Belarus for foreign investors.

This paper examines factors motivating private residential rental property investment in New Zealand, especially in the context of low inflation. The related question of the need for retirement income provision is also examined. The findings are based on a postal survey of residential rental property owners and qualitative interview data.

The inclusion of private agencies in carrying out tasks in the field of structural engineering and transport infrastructure, which have previously been carried out by the public sector, is a question that is being keenly discussed at present. Given the limited room for manoeuvre in public budgets and in view of the anticipated gains in efficiency resulting from solving problems through partnership, some see a good opportunity for implementing large-scale property projects to the benefit of everyone involved. On the other hand, it is feared that this will lead to a greater strain being put on the citizen if additional costs arise, e.g. in the form of charges, and that the means at the disposal of public agencies to influence developments will be significantly reduced. A wide range of experience of including the private sector has been gained in many European countries in the field of public building investments, in particular in connection with structural engineering works and toll roads as well as bridges and tunnels and railway infrastructure. The Federal Ministry of Transport, Building and Housing has commissioned a research project with a view to presenting this as a synopsis and hence deriving recommendations for ways of applying the conclusions to Germany. The winner of a competition for the contract, a joint venture linking the universities TU Bergakademie Freiberg and TU Berlin, was assisted by a team of experts comprising members of staff from the Ministry, the Federal Office for Building and Regional Planning and the Federal Audit Office. Interesting observations have been made in the following EU Member States, Great Britain, the Netherlands, France, Italy, Spain and Portugal. The private funding of road construction regularly plays a key role in this context. Great Britain has already gained the most practical experience in this field and also has the most sophisticated thinking as far as the theoretical analysis of the subject ìpublic-private co-operationî is concerned. The Netherlands are planning to make a new start with private funding after two tunnel projects were criticized, in particular by the National Audit Office. The reorientation of the way the State deals with property matters was linked to the setting up of a professional, more centralized property management (Public Real Estate Management). The principal criteria for assessing the success of projects in Europe are: - concentration of experience and dissemination of knowledge through centres of competence; - general tax conditions ensuring equal treatment of private and public service providers; - award procedures which help to actively ensure through competition that the best solution among several offers is chosen; - a distribution of risks that places the risks where they can be taken on at the lowest economic cost from the userís point of view; - an appropriate representation of future payment and revenue flows achieved with the aid of suitable interest rates; - the inclusion of the effects of a solution for the economy as a whole; and especially the application of a life-cycle-oriented approach instead of a short or medium-term perspective limited solely to the budget of a single local authority. The successes achieved in other European countries show that including the private sector more in the setting up and implementation of property projects initiated by the public sector will result in projects being realized with which both the state authorities, the private agencies involved and also the citizens as users and taxpayers are satisfied. On the other hand, private advance financing only provides short-term relief from budgetary bottlenecks without showing any advantages for the economy as a whole. It becomes apparent that the inclusion of private agencies in carrying out public tasks does not automatically result in advantages. This is only the case where multi-stage procedures that maintain competition create benefits for the economy as a whole.

&quot;Property is a significant asset in the balance sheets of some Singapore industrial /commerce firms and hotel corporations. In this research, we take on the task to examine the relationship between real estate and stock market valuation of these business firms from an asset pricing perspective. Specifically, the real estate sensitivity of &quot;&quot;&quot;&quot;property-intensive&quot;&quot;&quot;&quot; non-real estate stocks is investigated in a three-index (market, sector and property) APT stock return model and further recast as a multivariate nonlinear regression model with across-equation restrictions.&quot;

This paper is based on extensive empirical research into commercial valuation practice in the UK. This research involved an analysis of valuation practice and procedure, long structured interviews with senior valuation professionals and experimental work with practising commercial valuers. It investigated the hypothesis that there was a link between valuer behaviour, the valuers relative familiarity with the geographical location where the property to be valued is located, and negligent valuations. This hypothesis was developed from an analysis of negligence cases and a survey of senior commercial valuers both of which strongly supported the link between negligent valuations and the familiarity of the valuer with the location. The mechanism that led otherwise competent valuers to fail in their task was, however, unclear from these sources. It was hypothesised a possible mechanism was that valuers miss-applied successful task completion strategies developed in familiar locations resulting in a greater risk of valuation failure in unfamiliar locations. The research findings supported most aspects of the research hypothesis. The experimental work and the practice survey illustrated that valuers do adopt a schema, or standard decision making strategy in carrying out valuation tasks. This schema commonly involves the adoption of an anchoring and adjustment strategy. This strategy was applied even where the valuer was unfamiliar with the location where the valuation took place. This strategy could be related to the resulting high levels of variance exhibited in the final valuation.

This paper models the development of the secondary market as a way of trading off its lower cost of securitization with adverse selection due to asymmetric information and high monitoring costs. We use a simple adverse selection model in the tradition of Akerlof (1970) with successive modifications, including licensing contracts similar to those of Leland (1979) and Chan and Leland (1982), to explain the evolution of the secondary market and discuss implications for the future, particularly as information improves.

CVM is a stated preference method based on surveys, in which respondents state their willingness to pay (WTP) for a certain good. This papers reports the first results a CVM study on housing market in Milan, aimed to produce economic data (median WTP for a sample of goods) to be used in statistical appraisal models as a solution of lack of data on prices.

The objective of this work is to propose a procedure to define the level of environmental quality of portions of urban areas. The steps of this procedure can synthetically be summarised as follows: 1) in depth study of the cultural and regulatory aspects of the sustainable development concepts; 2) setting up of a three-dimensional matrix that is able to synthesise the urban reality; 3) definition of a system of indicators of urban quality; 4) definition of a mathematical model that is able to deal with the acquired knowledge; 5) application of a study case. The study of these themes is based on the necessity of a reconciliation between the environment, growth and development over the following decades for the entire planet.

There are two well-known methods developed for constructing house price indices: the hedonistic model and the repeat sales technique. Our research focuses on the repeat sales methodology and suggests introducing the time dependence into the model. Growth rates or indices are of interest.

This paper argues for the development of a theory that explains the evolution of property capital flows in Central European transitional economies. The foundation for a property investment development path (PIDP) theory primarily builds on John Dunningís extensive work on multinational enterprise activities and his seminal theory on the investment development path. Recent research on transitional economies, coupled with current work in economic growth theories, foreign direct investment research, and international capital markets, also support empirical research of a PIDP theory. However, the body of economic and financial literature does not specifically address several critical roles of property development and property capital flows in transitional and developing economies. An empirically based PIDP theory attempts to bridge the gap in the economic growth and international business literature and expand our understanding of property capital flows in transitional economies. The PIDP theory primarily seeks to answer a fundamental question: why property capital flows follow an evolutionary path in response to multinational enterprise (MNE) activities that structurally change local property markets in transitional economies. A secondary goal of the PIDP theory seeks to identify economic determinants in transitional economies that predict rational property capital flow demands, defined as those that benefit banks, developers, construction firms, and policy makers.

This thesis advises on the optimal index construction technique on behalf of the commercial real estate broker organisation Dynamis in the Netherlands. The database contains 1993 rent-renewals in fifteen years of brokerage from 1984 to 1998. Out of the plethora of indices available in the real estate and other literature five basic forms are defined and applied to the database. These are the simple mean and median indices, the weighted average median index, the hedonic indices and a repeat-rent index. This is meant as an onset to further investigation on basis of these basic methods.

Private rental housing in Israel comprises almost exclusively individual dwelling units located in multi-family condominiums and owned by petty amateur landlords. Using data from the 1998 Household Expenditure Survey and the 1995 Population Census, the paper examines the private rental sector by comparing its housing stock and the socioeconomic characteristics of the landlords with other tenure forms.

Using individual residential ARM mortgage data in Singapore, this study finds a low prepayment rate, which is influenced predominantly by macroeconomic factors than mortgage-specific factors. Specifically, the prepayment rate is increasing in residential property prices, but declining in income (as proxied by GDP) and volatility in mortgage Rates.

Paper presents results of two-year study of a apartment market in Minsk, the 2-mln. capital city of Belarus. Every quarter, i.e. in April 1999, in July 1999, and in October 1999 as well as in January 2000 and in April 2000 cuts of the market were maid. From April 1999 till April 2000 an average price of 1sq.m of total area falls from USD429.1 to USD315.4. The growing of offer has form 23% at the decreasing of demand of 17%. This unprecednental fall of real estate market is characteristic for the whole country and is connected with a mutual impoverishment of populations. Trends gives a forecast of following falling of prices at least on the nearest half year.

The aim of the studies conducted by the authors of the paper was to provide methodological bases for performing market analyses. The research area comprised local property markets, characterized by a small number of transactions. Different research methods were used in the course of the studies, including questionnaire examinations and statistical procedures. The results are presented in a descriptive form and in that of tables and diagrams.

Among the three activities of a real estate broker, we focus on his bargaining function. Our aim is to measure the impact of delegation on the outcome of a bargaining process between a buyer and a seller. We lead an experimental investigation of a two-stage game with ultimatum bargaining.

Real estate professionals who practice globally need to understand what is the same and what is different when they enter a new market. Denmanís contribution to real estate education is to provide a means for analysing the legal and political frameworks within which property markets operate. His contribution is in danger of being forgotten and this paper seeks to remind todayís academics and practitioners of his unique scholarship and insights.

This paper explores the origin and evolution of the Asian Financial Crisis in connection with the real estate development, focusing on the unique characteristics and problems of Chinaís real estate sector, with special reference to Shanghai.

In the past, real estate market data gathering was not planned in Slovenia. First official real estate market data gathering was performed in the Municipality of Maribor, on the basis of a special form. This article presents an analysis of the data gathered in this way and the method of determining the standardised adjustments in a valuation model for the needs of taxation in the area concerned.

The use of MPT in the construction real estate portfolios has two serious limitations when used in an ex-ante framework: (1) the intertemporal instability of the portfolio weights and (2) the sharp deterioration in performance of the optimal portfolios outside the sample period used to estimate asset mean returns. Both problems can be traced to wide fluctuations in sample means Jorion (1985). Thus the use of a procedure that ignores the estimation risk due to the uncertain in mean returns is likely to produce sub-optimal results in subsequent periods. This suggests that the consideration of the issue of estimation risk is crucial in the use of MPT in developing a successful real estate portfolio strategy. Therefore, following Eun & Resnick (1988), this study extends previous ex-ante based studies by evaluating optimal portfolio allocations in subsequent test periods by using methods that have been proposed to reduce the effect of measurement error on optimal portfolio allocations.

A corporate real estate portfolio is constantly subject to changes. In order to keep up with these changes, a corporate real estate manager should focus more on ways to deal with future risks and uncertainties rather than finding solutions that are only valuable for todayís problem. This paper elaborates on methods to cope with an uncertain future. Using scenario planning to deal with uncertainties and creating flexibility in the real estate portfolio will help a corporate real estate manager to make real estate decisions that will add value to the core business and optimise the performance of the real estate portfolio.

This paper discusses the challenges currently facing the profession as it moves beyond the complexities and contradictions which now confront it. It recommends that the key to the professionís success lies with it becoming more confident and more open to the adaptation of the current body of professional knowledge.

This paper analyzes three specific aspects of this relationship: establishing the economic context, the public/private actors and their respective spheres of action are underlined. One can wonder if there an European model in planning? The two fold typology of urban planning systems (Continental and Anglo-Saxon) pleads for the recognition that there are indeed two models in planning : the Continental planning and the Anglo- Saxon way of planning. Another set of questions presented here : are there any contradictions among the two planning systems or are they rather complementary in a diversified European context? Assessing the systems at work implies an analysis of each system's results which are based on the ability (or not) to achieve the stated goals during the implementation phase.

Households turnover in a large rental housing stock, measured during 7 years, vary according to the size of the dwellings (m2, number of rooms). Variations of turnover could provide to real estate owners and managers a bench mark for conception and management of rental housing.

The annual income return for rural property is based on two major factors being commodity prices and production yields. Commodity prices paid to rural producers can vary depending on the agricultural policies of their respective countries. Free trade countries, such as Australia and New Zealand are subject to the volatility of the world commodity markets to a greater extent than those farmers in protected or subsidised markets. In countries where rural production is protected or subsidised the annual income received by rural producers has been relatively stable. However, the high cost of agricultural protection is now being questioned, particularly in relation to the increasing economic costs of government services such as health, education and housing. When combined with the agricultural production limitations of climate, topography, chemical residues and disease issues, the impact of commodity prices on rural property income is crucial in the ability of rural producers to enter into or expand their holdings in agricultural land. These problems are then reflected in the volatility of the rural land capital returns and the investment performance of this property class. This paper will address the capital return performance of a major agricultural area and compare these returns on the basis of both location of land and land use. The comparison will be used to determine if location or actual land use has a greater influence on rural property capital returns. This performance analysis is based on 30,000 rural sales transactions. These transactions cover all market based rural transactions in New South Wales, Australia for the period January 1990 to March 1999. Correlation analysis and investment performance analysis has also been carried out to determine the possible relationships between location and land use and subsequent changes in rural land capital values.

Sellers and brokers may differ in preferred timing of costly promotion. Sellers with holding costs are anxious to sell. Sellers with showing costs want a slower approach. We find a standard listing contract where the broker chooses promotion timing is efficient if sellers have no significant holding or showing Costs.

Changing work practices and the increased globalisation of business are increasingly requiring that business professionals work away from home on a short to medium term basis. In addition greater international leisure travel and an increasing trend to take extended breaks between jobs, sabbaticals and working-holidays are also impacting on the demand for temporary accommodation. Up until relatively recently their have been few alternatives to hotels for business or leisure travellers seeking longer-term accommodation. However, a serviced apartment sector is now emerging in the UK. Serviced apartments are typically located in city centre locations, often near the business core. They offer a range of accommodation standards, although are usually equivalent to a three to five star hotel. The apartments offer self-contained accommodation and guests are able to select the level of service they require. As in the serviced office market, income is derived from both rent and services. While serviced apartments are well established in the US and the Far East, the sector is in an embryoic stage in the UK. The current supply is dominated by higher-end accommodation, with corporates providing the core area of demand. However experience in other countries suggests that the scale and profile of the market may be considerably broader. This paper details the current profile of the serviced apartment sector in the UK. The research then looks at both the scale of the market and investigates current and future drivers of demand. The findings are based on a survey of operators of this type of accommodation and a range of occupiers. The paper also investigates the factors influencing supply of serviced apartments. This includes the impact of planning restrictions, in particular the 90-day rule, which dictates that private rentals must last at least 90 days, and the routes operators have adopted to overcome this constraint. The relative value of this use compared to potential alternatives, including commercial uses is also considered, particularly in light of the significance of services-derived income.

This paper explores the development of planning theory, reviews current theories about location and collaborative processes and investigates whether the theories can explain spatial patterns of the commercial development of investment property in areas in Europe where such development is restrained. Business park development is used as the empirical example.

The correct measurement of house price movements over time on a regional level and for small market segments, with relatively few transactions, is considered. The research is based on data of housing market transactions in the Amsterdam Region over the period 1985-1999. In response to the ëconstant qualityí price index problem two main methodologies for index construction have been adopted: a Fixed-sample approach and a Hedonic approach. In the hedonic price model a Hierarchical Trend Model is used for estimation. A Kalman filter could be applied to estimate models of this kind. Price index series, of the Hedonic type and the Fixed-sample type, are presented for the region as a whole as well as per segment and house type within the region. The analysis shows that, over the period studied here, the Hedonic index numbers are superior to the Fixed-sample index numbers, being less sensitive to small market segments and small housing categories.

The Revised Concept Plan 1991 provides for the decentralisation of commercial activities to regional and sub-regional centres. This paper examines the attractiveness of regional centres as a place for employment using a case study of Tampines Regional Centre, which is currently the most developed regional centre in Singapore.

This paper considers the processes of appraisal smoothing within the direct real estate market and of price discovery between the indirect and direct real estate markets. Appraisal smoothing involves the optimum combination of past and current information, the latter observed with an error. Price discovery between the markets requires that information is incorporated into price more quickly in one market than the other. We hypothesise that both appraisal smoothing and price discovery to vary according to market liquidity, both temporally and in cross section. A model of the combined processes is constructed and estimated separately for the U. S., U. K., Singapore and Hong Kong. A Kalman filter is used to extract and update market price and fundamental price series from the observed appraisal series. Liquidity is proxied temporally by price change.

Fundamental to assessing the future direction of commercial property markets is a clear understanding on the demand for space. This paper examines new space occupiers in three leading Australian property markets, identifying their motives and rationale for the new space and the current macro economic and micro economic influences in their decision making process. Knowledge on the rapid changes in business environment is now a requirement to comprehend the causes and patterns of new space demand and the prospects for commercial property markets. This paper shows structural market analysis is the framework for understanding the complex dynamics of the space demand market and the backbone to future research on commercial property markets.

Economic theory is concerned with the production, distribution and consumption of resources namely factors of production, goods and services most of which are subject to exchange within a market. Much economic theory is concerned with the central debate respecting the conditions necessary for the optimal allocation of resources through market exchange. The paper explains the analysis of individual economic agentís preferences and its translation into measures of individual and social welfare and societyís valuation on the specific use of resources. Economic theory bases valuation upon individual preferences expressed through individual agentís interactive behaviour within a perfect market. Limitations of this theoretical approach and its underlying assumptions are explained. The current radical critique of economic methodology is considered in relation to the valuation of resources (see for example Lawson). In particular the implications of assumptions with respect to perfect versus non-perfect information available to agents acting as decision makers in a market are discussed. in the context of valuation. The paperís critique of the currently available methodology draws upon recent developments in the theoretical economics literature to complement that of property valuation in order to offer a constructive insight into the current debate on economic valuation. In particular, the distributive and allocative implications of current economic thinking concerning information and competitive markets for valuation is discussed. The paper is accordingly of interest to all those concerned with valuation theory in the context of the economic debate as to the efficiency of the market as a mechanism for trade in respect to the property market.

Social public housing offer rents that are more than 60 % undervalued. The total `loss' of public sector landlords amounts to 37 billions Francs per year. The `rebate' allows social sector tenants to consume 10 % more housing services and 11 % more of other goods. The surplus gain of living in the public sector is about 34 billions Francs. Housing allowances represent half this amount for the same tenants and are more concentrated on the poorest population, because some high income households live in the social sector. The surplus loss for the collectivity due to these transfers is 3 billions Francs per year, 8 % of the transferred sums.

The potential for infrastructure to increase regional amenity, urban density and economic activity is also usually reflected in an overall increase an property values. This paper reviews the status of current knowledge and provides a conceptual framework for future research.

Paper investigates the case of two submarkets of contemporary Russian Real Estate market: single houses and so-called cottages. Comparative analysis and model building was done on the databases for Odintsovo district (sample of sales for single houses and sample of listing prices for cottages) and on Tver and Novgorod databases.

In the context of privately owned rural establishments there is generally a lack of knowledge on the contribution that is made to the market value of a property by its component of remnant native vegetation (RNV). Furthermore, there is a lack of knowledge on the impact to market value that may result from the protection of remnant native vegetation by the registration of a heritage agreement over a propertyís certificate of title. This gap in knowledge has the potential for unexpected policy outcomes in relation to RNV management. In relation to these two issues the research focused on transactions of non irrigated rural holdings1 in South Australia that have a component of RNV.

It is well-known that in Italy there are serious difficulties in carrying out urban plannings and in the past the urban culture widely discussed this issue, without reaching definite conclusions. The problem therefore also resurfaces in the case of urban planning of big cities, drawn up not long ago. These preliminary remarks explain the lively discussion that currently unfolds among engineers about ways and methods of valuation both of prior feasibility and of the effects of things estimated by urbanistic instruments and regulations. The DCFA (Discounted Cash Flow Analysis), generally used for estimating private investments, could also be useful in the public sector. We would like to present a case-study of the new Regulatory Town Planning of Turin, in existence since 1995. In 1998, three years later, the Administration has estimated changes to townplanning and, consequently, he decided to modify planning regulations. The 1998 survey has demonstrated the need to re-evaluate the real possible redevelopment of the areas as the town-planning proves, by an economic study of 30 areas. We also intend to use the DCFA with some indexes that can measure specific conditions of Feasibility.

The rapid changes of environment have a considerable effect on the real estate prices. The consequences of urban constructions (like new tramways or metro stations, new bridges or industrial areas) are durable and difficult to measure. The estimation of these environmental transformations is important as it has a strong effect on the local real estate market. The methodologies aimed to solve this problem are based on the construction of sector house price indices that help to evaluate and in some cases, even to foresee the possible changes of the real estate situation in each sector. The construction of indices focuses on measuring the evolution of effective real estate values in time basing on an assumption that we possess information on the representation samples for all the transactions concerned. There exist different methodologies for the construction of price indices in real estate: some of them are based on the price of transactions, others present expert evaluations or quotas of real estate societies. The objective of our research is to present an original methodology for house price indice construction in real estate based on the repeat sales model. We intend to show that the introduction of time dependency into this model allows creating annual sector indices susceptible to price differences provoked by major environmental changes.

In the UK over the last twenty years there has been a proliferation in the statutory provision for wayleaves. The utilities requiring wayleaves such as the water, gas and electricity companies have now been joined by cable TV and a host of telecommunications providers. All have access to compulsory powers. However, there are variations between these powers and between the compensation arrangements. The paper has two main objectives. First, to examine whether compulsory purchase powers, (coupled with statutory compensation) are now applicable following the privatisation of the gas, electricity, water and telecommunication companies. Secondly, to examine the process and basis by which the utilities value and negotiate wayleave agreements. The paper considers the results of a six-month study of wayleaves funded by the RICS, which was completed in November 1999. The paper recommends that statutory powers should continue to be available where utilities are under a statutory duty to develop and maintain a service. However, the nature of the powers requires to be redefined and standardised. In addition, the paper recommends that the claimant should not merely be entitled to the financial equivalent of their loss, but that a consideration should be paid which reflects the gain to the promoter.

&quot;In the event of credit nonreturn it becomes to be impossible without prejudice to banks to sell an object of security. That stands the question of validness of aplicable bases of valuation, in particular of delimitation in using definitions &quot;&quot;&quot;&quot;market value&quot;&quot;&quot;&quot;, &quot;&quot;&quot;&quot;mortgage lending value&quot;&quot;&quot;&quot;, &quot;&quot;&quot;&quot;realization value&quot;&quot;&quot;&quot;, and &quot;&quot;&quot;&quot;liquidation value&quot;&quot;&quot;&quot;. We consider justified for aims of the mortgage lending an use of only market value, as well as liquidation value of real estate as measure of market value under forced sale in restricted time. Use of definitions &quot;&quot;&quot;&quot;mortgage lending value&quot;&quot;&quot;&quot; and &quot;&quot;&quot;&quot;realization value&quot;&quot;&quot;&quot; is represented excessive.&quot;